What was the total amount of My Salon Suite's net deferred tax liabilities in 2023?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
assets and liabilities consist of the following as of December 31:
| 2024 | 2023 | |
|---|---|---|
| Deferred tax assets | ||
| Allowance for credit losses | $ 213,104 | $ 259,270 |
| Accrued compensation | 216,180 | 105,770 |
| Share-based compensation | 585,048 | 653,599 |
| Accrued professional fees | 51,940 | 34,418 |
| Deferred revenue | 1,613,108 | 860,544 |
| ASC 842 lease liability | 140,303 | 3,309 |
| ASC 606 adjustments | (224,956) | (224,956 ) |
| Total deferred tax assets | 2,594,727 | 1,691,954 |
| Deferred tax liabilities: | ||
| Intangible assets | (18,813,230) | (18,689,307 ) |
| Prepaid expenses | (4,117) | 9,702 |
| ASC 842 Right of Use Asset | (142,804) | (4,487 ) |
| Depreciation | (31,197) | (90,514 ) |
| Tax amortization of Sec.174 | (7,430) | (137,714 ) |
| Total deferred tax liabilities | (18,998,778) | (18,912,320 ) |
Source: Item 6 — Other Intangibles and Goodwill (FDD pages 274–314)
What This Means (2025 FDD)
According to My Salon Suite's 2025 Franchise Disclosure Document, the company's net deferred tax liabilities totaled $(17,220,366) as of December 31, 2023. This figure represents the net amount after considering both deferred tax assets and deferred tax liabilities. Deferred tax liabilities generally arise when there are differences between the financial reporting and tax bases of assets and liabilities, and they are expected to result in future tax obligations. Deferred tax assets, on the other hand, represent future tax benefits. The net deferred tax liability indicates that My Salon Suite had a greater amount of future tax obligations than future tax benefits at the end of 2023.
For a prospective franchisee, understanding deferred tax liabilities is crucial because it reflects the company's overall financial health and future tax obligations. A significant net deferred tax liability could indicate that the company may have higher tax payments in the future, which could impact its profitability and cash flow. However, it is important to note that deferred tax liabilities are a normal part of business operations and can arise from various accounting practices and tax regulations.
It is also worth noting that the FDD provides a breakdown of the components of deferred tax assets and liabilities, including items such as intangible assets, prepaid expenses, depreciation, and tax amortization. Reviewing these components can provide further insights into the nature of the deferred tax liabilities and their potential impact on My Salon Suite's financial performance. Franchisees should consult with a financial advisor to fully understand the implications of deferred tax liabilities and how they may affect their investment.